BILL ANALYSIS Ó AB 1742 Page 1 Date of Hearing: March 29, 2016 ASSEMBLY COMMITTEE ON HUMAN SERVICES Susan Bonilla, Chair AB 1742 (Mark Stone) - As Introduced February 1, 2016 SUBJECT: CalWORKs: eligibility SUMMARY: Increases the time limit for cash aid to adults through the California Work Opportunity and Responsibility to Kids (CalWORKs) program from 48 months to 60 months and increases the CalWORKs earned income disregard to support employment. Specifically, this bill: 1)Increases the time limit on aid for CalWORKs recipient parents and caretaker relatives from a cumulative total of 48 months to 60 months, thereby aligning with federal time limits for the federal Temporary Assistance for Needy Families (TANF) program. 2)Increases the amount of income disregarded when calculating CalWORKs eligibility and aid amounts from $225 plus 50% of the remaining earned income to $450 and 70% of the remaining AB 1742 Page 2 earned income, as specified. 3)Makes conforming changes to other statutory provisions that include the current 48-month CalWORKs time limit and provides that no appropriation shall be made to implement the provisions of this bill. EXISTING LAW: 1)Establishes under federal law the Temporary Assistance for Needy Families (TANF) program to provide aid and welfare-to-work services to eligible families and, in California, provides that TANF funds for welfare-to-work services are administered through the CalWORKs program. (42 U.S.C. 601 et seq., WIC 11200 et seq.) 2)Establishes income, asset and real property limits used to determine eligibility for the program, including net income below the Maximum Aid Payment (MAP), based on family size and county of residence, which is around 40% of the Federal Poverty Level. (WIC 11150 to 11160, 11450 et seq.) 3)Establishes a 48-month lifetime limit of CalWORKs benefits for eligible adults, including 24 months during which a recipient must meet federal work requirements in order to retain eligibility. (WIC 11454, 11322.85) 4)Requires all individuals over 16 years of age, unless they are otherwise exempt, to participate in welfare-to-work activities as a condition of eligibility for CalWORKs. (WIC 11320.3, 11322.6) 5)Establishes the number of weekly hours of welfare-to-work AB 1742 Page 3 participation necessary to remain eligible for aid, including requirements for an unemployed parent in a two-parent assistance unit, as specified. (WIC 11322.8) 6)Defines disability-based unearned income, within the CalWORKs program, as state disability insurance benefits, private disability insurance benefits, temporary workers' compensation benefits, social security disability benefits, and any veteran's disability compensation. (WIC 11451.5) 7)Defines earned income as gross income received as wages, salary, employer-provided sick leave benefits, commissions, or profits from activities such as a business enterprise or farming in which the recipient is engaged as a self-employed individual or as an employee. (WIC 11451.5) 8)Exempts the following when calculating a family's income for the purpose of determining CalWORKs eligibility: If the family's disability-based unearned income does not exceed $225 a) All disability-based unearned income, plus any amount of not otherwise exempt earned income equal to the amount of the difference between the amount of disability-based unearned income and $225. b) Fifty percent of all not otherwise exempt earned income in excess of the amount applied to the difference between the amount of disability-based income and $225. If the family's disability-based unearned income exceeds $225 a) All of the first $225 in disability-based unearned AB 1742 Page 4 income. b) Fifty percent of all earned income. (WIC 11451.5) FISCAL EFFECT: Unknown. COMMENTS: CalWORKs: The CalWORKs program provides monthly income assistance and employment-related services aimed at moving children out of poverty and helping families meet basic needs. Federal funding for CalWORKs comes from the TANF block grant. The average 2016-17 monthly cash grant for a family of three on CalWORKs (one parent and two children) is $497.35, and the maximum monthly grant amount for a family of three, if the family has no other income and lives in a high-cost county, is $704. According to recent data from the California Department of Social Services, around 497,000 families rely on CalWORKs, including over one million children. Nearly 60% of cases include children under 6 years old. Maximum grant amounts in high-cost counties of $704 per month for a family of three, with no other income, means $23.46 per day, per family, or $7.82 per family member, per day to meet basic needs, including rent, clothing, utility bills, food, and anything else a family needs to ensure children can be cared for at home and safely remain with their families. This grant amount puts the annual household income at $8,448 per year, or 42% of poverty. Federal Poverty Guidelines for 2016 show that 100% of poverty for a family of three is $20,160 per year. Welfare-to-Work requirements: Welfare-to-work activities within AB 1742 Page 5 the CalWORKs program include public or private sector subsidized or unsubsidized employment; on-the-job training; community service; secondary school, adult basic education and vocational education and training when the education is needed for the recipient to become employed; specific mental health, substance abuse, or domestic violence services if they are necessary to obtain or retain employment; and a number of other activities necessary to assist a recipient in obtaining unsubsidized employment. Unless they are exempt, single parent adults must participate for at least 30 hours per week in welfare-to-work activities, whereas the minimum participation requirement for two-parent families is 35 hours per week. After receiving aid for up to a maximum of 24 months, adults without an exemption must meet federal work requirements, with more restrictive employment settings and allowable employment activities. If a CalWORKs recipient who is not exempt from participation does not meet his or her welfare-to-work requirements, the recipient is sanctioned for noncompliance, and that recipient's portion of the family's grant subtracted from the amount provided to the family to meet basic needs. CalWORKs time limits: Passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), which was the final piece of federal welfare reform legislation, marked the end of the previous Aid to Families with Dependent Children (AFDC) program and the beginning of the block-granted TANF program, under which CalWORKs was established in California state law. Among the numerous programmatic changes included within the TANF program was a requirement that eligible parents work or participate in work training or other activities that lead to employment. The TANF program provides a great deal of flexibility in how states implement their respective programs, including the ability for states to establish more truncated time limits than the 60-month lifetime limit on aid for adult recipients authorized within it. As of 2011, California has limited aid to adult CalWORKs recipients to a lifetime limit of 48 months. AB 1742 Page 6 Earned Income Disregard (EID): While the maximum CalWORKs grant amounts for high-cost counties and low-cost counties are $704 and $670, respectively, the average monthly grant amount across the state is much lower at $497 per month, as it reflects a reduction in the maximum grant due to other income in a recipient family's household. By allowing a certain amount of income to be retained and excluded from grant calculations, the EID plays a major role in facilitating and encouraging paid employment. Among adults who are living with their families in poverty and applying for CalWORKs assistance due to unemployment or underemployment, the EID also facilitates working adults' ability to work more hours and seek higher wages that don't fully offset the grant amount they could otherwise receive without any income. Under current law, the first $225 of an adult recipient's gross earned income is disregarded from CalWORKs grant calculations, then 50% of the remaining income is disregarded, with the other 50% constituting the first portion of what would otherwise be the recipient's grant amount based on the maximum amount allowed. For example, a recipient with a monthly income of $700 will have the first $225 disregarded, leaving $475 from which another 50% will be disregarded. This will leave $237.50 in income that will be counted when calculating the family's grant amount; the grant amount in a high-cost county would be $466.50 ($704 - $237.50), and the grant in a low-cost county would be $432.50 ($670 - $237.50). Need for this bill: During the Great Recession, the Legislature enacted a number of cuts to the state's safety net programs, including CalWORKs grant reductions and reductions in the EID. The 2011 Human Services Budget Trailer Bill, SB 72 (Chapter 8, Statutes of 2011), reduced the EID to $112 plus 50% of the remaining earned income, causing more of a family's monthly income to count against the maximum grant amount and thereby reducing a family's total monthly income. A year later, when AB 1742 Page 7 numerous other changes were enacted within the CalWORKs program, the EID was restored to the first $225 and 50% of remaining countable income. The author of this bill is seeking to continue the trend of increasing the EID in order to facilitate families' ability to increase earnings and build financial stability as they participate in education programs and transition to work. SB 1041 (Committee on Budget and Fiscal Review) Chapter 47, Statutes of 2012, which was the Budget Act trailer bill that restored the EID, was also the trailer bill that created the Welfare-to-Work 24-Month Time Clock, thereby requiring aided adults, once the 24 months of increased flexibility in required activities runs out, to meet federal work requirements, with more restrictive employment settings and allowable employment activities, in order to continue to receive aid and services. While this bill will not abolish this requirement, it does seek to provide adults expanded opportunities to transition to employment and better support their families by increasing the overall maximum time on CalWORKs aid to the 60 months allowed by the federal TANF program. The author states: "According to the Federal Supplemental Poverty Measure, nearly a quarter of Californians live in poverty. While California as a whole has recovered from the Great Recession, the recovery has been uneven, and many impoverished Californians continue to struggle. According to the Public Policy Institute of California, the 2014 post-recession poverty rate in the state was 16.4%, a 4% increase from the prerecession levels of 2007. Poverty, particularly childhood poverty, results in a variety of negative short- and long-term outcomes for families. It is in the state's interest to pursue a multi-pronged approach to reduce poverty amongst Californians. A restoration of the CalWORKs lifetime limit to its pre-recession level and an EID increase are necessary strategies to pursue in the fight against poverty." AB 1742 Page 8 REGISTERED SUPPORT / OPPOSITION: Support California Alternative Payment Program Association (CAPPA) California Association of Food Banks California Catholic Conference California Food Policy Advocates (CFPA) California Immigrant Policy Center (CIPC Children's Defense Fund - California Coalition of California Welfare Rights Organizations, Inc. County Welfare Directors Association of CA (CWDA) Courage Campaign Ella Baker Center for Human Rights Hunger Action Los Angeles AB 1742 Page 9 National Association of Social Workers, CA Chapter (NASW-CA) Saint Anthony's Foundations Western Center on Law and Poverty - sponsor Opposition None on file. Analysis Prepared by:Myesha Jackson/Daphne Hunt / HUM. S. / (916) 319-2089